Member-funds and Cooperative Performance?

Agrawal Rajesh, Raju K V, Reddy Prathap, Shrinivasan R and Mankal Sriram

No WP2002-10-01, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: This research examines the role of member-funds in multi-purpose cooperatives in the state of Andhra Pradesh, India. The central thesis is that member-funds, both in terms of quantity and quality, can enhance the control members exert on the cooperative. The involvement of members through their capital stake could be at various levels - by the provision of permanent capital, long-term capital and short-term capital. We expect that each of these will have differing effects on control and on the culture and systems of the cooperative. Such an effect on control is expected to directly drive cooperative performance, and indirectly enhance cooperative performance through greater usage of the cooperative by the members. Enhanced cooperative performance in turn would satisfy members, and the loop will hopefully be completed; satisfied members would place more funds with the cooperative. The research used data collected from 923 individuals and 30 multi-purpose cooperatives, as well as case-studies of four successful multi-purpose cooperatives. The "bottom-line" of this research is that member-funds have a central role in enhancing cooperative performance. Funds provided voluntarily, either as an outcome of collective cooperative level decision making or of individual level decisions are of high quality. Externally compelled member-funds are of low quality, as are short-term member funds.

Date: 2002-10-01
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